Short options
What is the expected move calculation and how do I use it to establish out-of-the-way short strikes?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
The expected move is often estimated from the price of an at-the-money straddle or from implied volatility, giving traders a rough range the market anticipates the stock may trade within by a given date, which some use to select strikes outside that range for short premium trades.
How it works
This calculation reflects market-implied expectations derived from option prices rather than a guaranteed trading range, and it changes as implied volatility and time to expiration shift.
An example
If a stock's expected move is calculated as plus or minus $5 around a $100 price, a trader might sell a credit spread with strikes at $93 and $107 to stay outside that range.
Risk & limitations
Cboe and OIC note the expected move is a probabilistic estimate based on current option pricing, not a certainty, and actual price moves frequently exceed it.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.